The 37-year-old rejoined United for a second spell last year but he had fallen out of favour this season under new manager Erik ten Hag.
The club statement read: "Cristiano Ronaldo is to leave Manchester United by mutual agreement, with immediate effect.
"The club thanks him for his immense contribution across two spells at Old Trafford, scoring 145 goals in 346 appearances, and wishes him and his family well for the future.
"Everyone at Manchester United remains focused on continuing the team's progress under Erik ten Hag and working together to deliver success on the pitch."
The Portuguese issued his own statement which read: "Following conversations with Manchester United we have mutually agreed to end our contract early.
"I love Manchester United and I love the fans, that will never ever change. However, it feels like the right time for me to seek a new challenge.
"I wish the team every success for the remainder of the season and for the future."
The development means Ronaldo is now free to negotiate with other clubs. There are no restrictions on who he can play for under the terms of his departure agreement with United, nor are there any ongoing obligations for the Old Trafford outfit.
Ronaldo's relationship with the club had appeared to become strained during the early part of the season and problems were brought to a head by last week's interview with TV presenter and journalist Piers Morgan.
Among his comments in the programme were claims that he felt "betrayed" by United and that he had no respect for Ten Hag.
He also said that he felt people at the club were trying to force him out and that United showed a lack of empathy when his daughter was in hospital ill.
There were also wider complaints about the standard of facilities at the club as well as criticism of the owners.
When United responded by appointing lawyers to consider potential action for alleged breach of contract, it became clear a parting of the ways was likely.
It is an abrupt end to a career at United that was revived amid much fanfare in August last year.
Ronaldo had looked set to join rivals Manchester City from Juventus but a late intervention from United took him back to Old Trafford.
Ronaldo first joined United from Sporting Lisbon as a teenager in 2003. He won three Premier League titles and the Champions League before going on to even greater success with Real Madrid.
After nine years at the Bernabeu and a further three at Juve, he returned to United as a five-time Ballon d'Or winner.
He scored 18 goals in the Premier League last season but United struggled, finishing sixth in a campaign in which they were managed by Ole Gunnar Solskjaer, Michael Carrick and Ralf Rangnick.
He made a slow start to the current campaign under new boss Ten Hag after missing their pre-season tour, starting just four Premier League games. There were further controversies as he left the ground early during a friendly and refused to come on as a substitute against Tottenham.